Kingsgate did not get back to the broker. Instead, it announced on 30 October 2015 that it entered into an 'exclusive option' with WPG for
$25,000 for a 'deal' that appears to offer almost no potential uplift to Kingsgate shareholders, and in any event in Marmota's opinion , is unambiguously and unequivocally inferior to Marmota's offer.
An invitation to Kingsgate shareholders:
… to share in the potential of Westpoint Hill
The WPG offer (30 October 2015) provides almost no upside potential to Kingsgate shareholders. Kingsgate has to pay all the costs of putting the mine into care and maintenance; Kingsgate receives no payment whatsoever until the mine re-opens (if it does); Kingsgate gets no royalty from ore from the main Challenger area; no royalty from ore from Challenger West; no royalty from any ore mined from any of Kingsgate's surrounding tenements (bundled in deal too); no royalty from any ore processed from any neighbouring company's tenements: the only royalty is $25 per ounce from the Challenger SSW Zone, should it ever be developed, and even then, only after 30,000 ounces have been produced.
By contrast, Marmota would like to extend to Kingsgate shareholders an invitation to share in the potential of both the Challenger mine (which is, after all, your asset) and from the potential of Marmota's exciting new Westpoint Hill discovery. While Marmota is happy to make a pure cash deal, Marmota is alternatively also willing to make a combination cash (minimum $1m to match WPG offer) + bonus equity offering to Kingsgate shareholders, so that Kingsgate shareholders can join in and benefit from any uplift from a successful rejuvenation of Challenger, and also prosper from the potential of the exceptional anomalism at Marmota's Westpoint Hill.
Either way, in Marmota's opinion, Marmota's offer is unequivocally superior.
Location of the Westpoint Hill target
Marmota's Westpoint Hill target is located about 25 km west of the Challenger Gold Mine, in Marmota's 100% owned Lake Anthony tenement (EL 5060), in the Woomera Prohibited Defence Area, in the highly prospective and significantly underexplored Gawler Craton [see Figure 1].
Figure 1: Marmota's Gawler Craton Gold Project
Westpoint Hill is located about 25km west of Challenger
[ The WPG tenements lie outside the map area, to the South East ]
COMPARISON TO DISCOVERY OF CHALLENGER
How Challenger was discovered
Challenger was discovered by a calcrete sampling program on a 1.6km x 1.6km grid.
This program yielded a stand-out sample point of 180ppb Au, surrounded on all sides by grid points yielding below 10ppb Au [see Figure 2a].
The 180ppb Au point was approximately 400m away from where the Challenger gold deposit was ultimately discovered.
Figure 2a: How Challenger was found: gold-in-calcrete Adaptation of diagram from Wills and Edgecombe (2014) 2
How the anomaly at Westpoint Hill was found
Marmota has adopted the same calcrete sampling methodology that was used to find Challenger. However, instead of using a coarse 1.6km x 1.6km grid (which can easily miss anomalies), Marmota implemented a 800m x 800m grid at Westpoint Hill.
Like Challenger, highly anomalous gold-in- calcrete samples stand out at Westpoint Hill relative to the surrounding grid [see Figure 2b], including a result of 107pbb Au.
Importantly, the stand-out results at Westpoint Hill cover not just one grid point, but three contiguous grid points, spanning approximately 2km.
Figure 2b: Anomaly at Westpoint Hill
(gold-in-calcrete ppb)